1. Federal Employees Compensation Act (FECA) · 1. Federal Employees Compensation Act (FECA) ... Additionally, the preparing of the estimated liability in future years, ... Insurance

Page 1 OIG Draft Report No. 22-01-009-13-001

1. Federal Employees Compensation Act (FECA)

Current Year Findings and Recommendations

a. Medical Providers with Multiple Provider Numbers

The policies and procedures governing the establishment and verification of new medical providersis not being followed. The FECA Procedure Manual 5-0200-(5)(d) requires that a person withineach district office be designated to maintain and update the Bill Pay System (BPS) provider file. This designated person is responsible for verifying that each name or firm entered into the providerfile is, in fact, a recognized provider or firm, and for keeping the exclusion list and the directorysupply current. Before entering a provider into the provider file, the designated person is to followthree steps in verifying the information which is to be entered into the provider file: 1) the mostcurrent excluded providers report is to be queried; 2) the regional telephone listings are to bechecked for a listing and if none exists, contact with the provider is to be made to determine whythey have no listing; and 3) the provider file is to be queried to determine whether the provider isusing a slightly but not significantly different address.

We identified a population of 8,461 payments in the BPS which were made to 3,571 providers. Many of these payments went to providers with differing provider numbers, but with the sameprovider name and address and were for services rendered to the same claimant. We tested asample of 64 of the 8,461 items, representing 26 medical providers and found that all 64 of theitems involved payments where the same medical provider was being paid under two or moredifferent provider numbers. The sample tested indicated that claimants were often reimbursed formedical expenses under more than one provider number. Although overpayments were not noted inthe 64 items we reviewed, assigning more than one provider number to a provider increases thepotential for overpayments. The edit controls within BPS, which are fundamental to identifyingpotential duplicate payments, cannot be effective if medical providers are issued more than oneprovider number.

Recommendation

1. We recommend that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure:

SS that persons designated to establish and update provider numbers are following theestablished policies and procedures for verifying whether the provider is already inthe database prior to assigning a new provider number in the BPS; and

SS that a review be conducted of the providers in the BPS which have multiple providernumbers and the excess provider numbers be eliminated.

Management’s Response:

As part of the regular Accountability Review process that OWCP conducts in the District Offices,the review items include a check to see that all the correct procedures are being followed regardingthe upkeep of the provider file. This includes separation of duties security issues, along with


ensuring that the individual charged with provider file updates is following all procedures. Inaddition, the current Bill Pay System (BPS) has controls in place to prevent a provider from doublebilling under multiple provider numbers. Specifically, if the same service is billed under the sameclaim number, on the same date of service, it will suspend for manual review. If these are in factduplicate bills, they will deny as such. The fact that a provider can simply submit the same billtwice, with different provider numbers, will not allow them to receive duplicate payments.

It should be noted that many medical groups bill OWCP under a single name, but with multipleprovider numbers. This would be the case when the medical group simply acts as a billing service,not a corporate entity, and bills all charges from each individual provider within the groupseparately. There is no OWCP, DOL, or U.S. Treasury regulation prohibiting this practice. Sinceit would not be possible to distinguish when a particular provider among the tens of thousands ofproviders that OWCP uses should or should not have multiple provider numbers, OWCP cannotfeasibly conduct any type of review as suggested. However, as noted above, the BPS has controlsto identify duplicate billings under multiple provider numbers.

OIG’s Conclusion:

This recommendation remains unresolved. Resolution is dependent upon management ensuringthat proper procedures are being followed in establishing providers which are eligible for paymentfrom OWCP systems. Providers should be properly screened to ensure the provider is a validprovider and that the provider is not being issued more than one provider number. The opportunityfor duplicate or erroneous payments is increased when one provider, with appropriate billinginformation, has multiple provider numbers under which services can be billed. Management willbe notified of the duplicate provider numbers indicated as a result of the next fiscal year’s audit. Management’s actions will be reviewed during our review of the duplicate provider numbers in thenext fiscal year’s audit.

b. Documentation of Actuarial Model

During FY 2000, ESA contracted with an actuarial firm for a new model to calculate the FECAactuarial liability. The actuarial firm prepared the new model, made revisions to the new model,and conducted a final meeting regarding the model. The firm was required to provide ESA withdocumentation of the model once the model was complete. As of December 15, 2000, thedocumentation of the model was not provided. The documentation of the model should includedetailed, step-by-step instructions for completing the various phases of the estimated liabilitiespreparation. Such instructions should be sufficiently detailed to permit preparation of theestimated liability by OWCP staff.

Assessing the accuracy and validity of the calculations within the model was difficult due to thelack of complete documentation in the model. Additionally, the preparing of the estimated liabilityin future years, which is to be accomplished within OWCP, may not be timely and consistentlyaccomplished if the actuarial model cannot be utilized by OWCP staff without the actuary’sassistance.


Recommendation

1. We recommend that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure that documentation of the new model is obtained.


Expanded documentation of the model as provided by the vendor will be made available.

OIG’s Conclusion:

This recommendation remains unresolved. Resolution is dependent upon the receipt of completedocumentation of the model to ensure that the actuarial liability can be timely and consistentlydetermined in the future.

Status of Prior Year Findings and Recommendations

Continuing Eligibility - SSA Earnings Confirmation

In our FY 1995 audit (OIG Report No. 12-96-007-13-001), we noted that claimant files did notalways contain updated earnings statements from the Social Security Administration (SSA) asrequired by FECA Procedure Manual, Part 2, Section 2-0812-9 b.

• We recommended that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure adherence to policies regarding file maintenance, and request wageinformation from the SSA every 3 years for claimants on the periodic roll to determinecontinuing eligibility for compensation.

Earnings statements are requested from the SSA for comparison to the earnings informationprovided by the claimants on Form CA-1032. In order for the claims examiner to request anearnings statement from the SSA, a signed release from the claimant must be obtained. The releaseis only valid for 60 days. Wage earnings are to be requested from SSA every 3 years.

During the current year’s audit, in 9 of 104 cases (9 percent), authorizations to obtain earningshistory reports from the SSA were not obtained. In 1 of 86 cases (1 percent), verification ofearnings was not requested from SSA, once authorization had been obtained from the claimant.Improvement in errors from prior years was noted; however, until an automated match ofelectronic wage information is accomplished, the manual verification of wages from SSA iscrucial.

New regulations, effective January 1999, allowed OWCP to obtain electronic wage informationfrom State programs. Implementation of these new regulations to obtain wage informationelectronically from State unemployment agencies would negate the authorization request processand would resolve this recommendation. Management responded to last year’s recommendation


that OWCP was working with the Employment and Training Administration, UnemploymentInsurance Service, to obtain wage information for matching. We continue to encourage andsupport an automated matching of electronic wage information.

This recommendation remains resolved and open. Closure is dependent on the establishment andimplementation of a corrective action plan that results in a reliable method of verifying the currentearnings of claimants whether by the electronic matching of earnings information or through theverification of earnings information with SSA as is currently required by the FECA ProcedureManual.


OWCP has changed the procedures for obtaining earnings information by requiring submission ofthe authorization to obtain earnings data from SSA (form SSA-581) every year along with the CA-1032 instead of every three years. The procedures emphasize the requirement to follow-up with asecond request within 30 days, and then refer the case to the OIG for investigation if the SSA-581is not signed and returned. In addition, each district office has been required to establish improvedprocedures to assure that the CA-1032 is issued and returned in each applicable case, and thatremedial action is taken promptly when the CA-1032 is not returned.

The OIG identified items in which compensation benefits had been paid, with no medical paymentsduring the past 2 years. Current medical evidence is required from every year to every 3 years(depending on case type) to verify the claimant's continuing disability status. The OWCP PeriodicRoll Management project (PRM) is the highly successful process used to review the entire universeof periodic roll cases. The cases identified by the OIG’s computer match are among those whichhave not been reached by the PRM. We will explore including the OIG method of identifying caseswith no medical payments for two years as a supplement to existing PRM prioritization techniques. However, since the original universe of older periodic roll cases will not have been reviewed by thePRM Teams for another 2-3 years due to resource constraints, some cases of this type willcontinue to be present during that time period.

OIG’s Conclusion:

This finding remains resolved and open. Closure is dependent on our review of the newprocedures which have been implemented to obtain earnings information annually with the CA-1032 which will be reviewed during the next fiscal year’s audit.

Accounts Receivable

In our FY 1996 audit (OIG Report No. 12-97-005-13-001), we noted that accounts receivablebalances were inaccurate and overstated.

• We recommended that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure that FECA implements the following in regard to the accounts receivable:


S Implement an accounts receivable system that ensures that debts are reviewedperiodically, collected timely and written off in accordance with the Debt CollectionImprovement Act of 1996.

SS Implement the Debt Collection Improvement Act of 1996 with regard tomaintaining the social security number of the individual to whom benefits werepaid.

Adequate review of the detailed accounts receivable subsidiary ledger for posting errors, correctassessments of interest, current status of balances, and the write-off of uncollectible balances arenot being performed. Management issued a Bulletin that directs the district offices to review theaccounts receivable balances, determine those debts on which a perpetual debtor status is in effectand make attempts to rectify the perpetual debtor status through compromise, write-off, oralteration of the existing payment plan. Improvement over errors identified in prior years wasnoted. In the current year’s audit, we noted the following:

1. Two of 20 debts (10 percent) were not timely finalized; consequently, no attempts weremade to establish a repayment plan.

2. In 3 of 77 debts (4 percent), the balance in the accounts receivable system was inaccurate.

3. In 3 of 77 debts (4 percent), interest was either assessed at the wrong amount or wasassessed when, under a court order, interest was not to be assessed.

The first recommendation remains resolved and open. Closure is dependent on the timelyfinalizing of debts, the accuracy of accounts receivable balances and the accuracy of interestassessments which will be determined during the FY 2001 audit.

The Division of Employees’ Compensation (DFEC) does not maintain the social security numberof beneficiaries in its ACPS database when an individual other than the claimant is receivingbenefits. As such, DFEC is not in compliance with the Debt Collection Improvement Act, whichrequires that the social security number of each recipient of Federal benefits be maintained. Also,referral of debts to the Treasury for administrative offset requires the social security number of theindividual to which benefits were paid. A redesign of the ACPS is in process that will provide forthe recording of the benefit recipient’s social security number when different from the socialsecurity number of the claimant.

The second recommendation is now resolved and open. Closure is dependent on theimplementation of the system redesign and verification that the benefit recipient’s social securitynumber is being maintained.


Both parts of this recommendation are considered resolved. DFEC has procedures in place whichaddress debt management, including the accuracy of accounts receivable balances and interestrates. Improvement in these areas is evidenced by the fact that no finding was made in the current


audit report in this area. With respect to the second part of this recommendation, a procedure formaintaining the social security number of the individual recipient of death benefits will not beimplemented until the system redesign is in effect.

OIG’s Conclusion:

These recommendations are now resolved and open. Closure is dependent on timely finalizingdebts, the accuracy of accounts receivable balances, the accuracy of interest assessments, theimplementation of the system redesign and verification that the benefit recipient’s social securitynumber is being maintained which will be determined during the FY 2001 audit.

Updated Procedure Manual

In our FY 1999 Management Advisory Comments (OIG Report 12-00-002-13-001), we noted theFECA Procedures Manual was outdated in several areas. We made the followingrecommendations:

The Acting Chief Financial Officer and the Assistant Secretary for Employment Standards:

• Update the FECA Procedures Manual.

• Establish a policy that the FECA Procedures Manual be promptly updated.

During our FY 2000 audit, we found that the FECA Procedure Manual was still outdated and didnot contain complete and accurate information on how transactions are processed or policies andprocedures which are to be followed.

The DFEC is updating the computer systems used in processing payments under FECA. TheFECA Procedures Manual should be updated in coordination with the update of the FECAcomputer systems. Failure to update the FECA Procedures Manual could preclude the complete,accurate and timely processing of FECA transactions.

These recommendations remain unresolved. Resolution is dependent on a corrective action planthat would update the FECA Procedure Manual in coordination with the FECA computer systemupdates.


With regard to updating the FECA Procedure Manual, Part 5 Benefit Payments, as noted by theauditors the Procedure Manual is currently undergoing a massive overhaul. We recognize thatmany of the updates to the procedures that have taken place have not been incorporated into Part 5,Chapters 300 through 600. Additional staff have been assigned to the Branch of Regulations andProcedures who have been tasked to accomplish the Procedure Manual updates of Part 5 Chapters300 through 600 as a priority.


DFEC has an established informal policy with respect to prompt updates of the Procedure Manualin general, which is that FECA Bulletins that describe new procedures must be incorporated intothe Procedure Manual within one year of the FECA Bulletin's publication. Our plan is toformalize this policy in writing by including it in Part O (Overview), Chapter 200 on ProgramDirectives.

OIG’s Conclusion:

These recommendations are now resolved and open. Closure is dependent on the receipt andimplementation of the new policy regarding updating the Procedure manual within one year ofFECA Bulletin publications and receipt of the updated FECA Procedure Manual.

Accuracy of Compensation Payments

In our FY 1997 Management Advisory Comments (OIG Report No. 12-99-001-13-001), thefollowing recommendation was made:

• The Acting Chief Financial Officer and the Assistant Secretary for Employment Standardsemphasize to claims examiners the necessity of computing accurate compensation payments.

During our FY 2000 audit, inaccurate compensation payments were made in 31 of 340 cases tested(9 percent). Daily and initial periodic roll payments are required to be reviewed forappropriateness and accuracy by a Senior Claims Examiner (SCE). The district offices havereceived additional staffing through periodic roll units to concentrate on the review of long-termcases. The periodic roll units should review in detail the pay rate and compensation percentage.

We also noted instances where claimants had notified OWCP that they had not received acompensation payment, at which time OWCP was to initiate a check tracer with Treasury andprocess a replacement check. OWCP did not issue a check tracer nor subsequently resolvewhether the original check was processed by Treasury in 10 of 43 (23 percent) instances reviewed. As a result, some claimants may have been overpaid.

The importance of computing accurate pay rates, determining the correct effective pay rate and paydate, and computing the proper period for which compensation is to be paid, should becommunicated to the claims examiners. Also, properly resolving outstanding check tracers shouldbe emphasized to the claims examiners.

This recommendation remains unresolved. Resolution is dependent upon receipt of a correctiveaction plan that ensures:

1. the receipt of documentation which prescribes additional controls designed to ensure thatpay rates are calculated accurately;

2. that SCEs or higher grade certifiers detect errors made in the computation of compensationpayments; and


3. that follow up on check tracers be conducted and the ACPS notated accordingly.


Higher grade certifiers are currently used to verify that all the factors or elements used/entered forcalculating the payment are correct. The factors for calculating the payment include the pay rate,the effective date of the pay rate, whether or not night differential or premium pay is involved,whether or not the claimant has dependents other than him or herself, and the period of entitlement. In almost all instances the computer system (ACPS) does the actual calculation of the dollaramount based on the factors entered. Review of the existing controls and instructions has indicatedthat they are comprehensive. In addition we continue our vigilance in monitoring this area throughboth the audit and the accountability reviews conducted each year.

In order to improve agency performance regarding the tracing of lost or stolen checks, the DFEChas taken two major steps:

1. We have installed the Treasury's new electronic check tracing system (PACER) which allowsthe immediate cancellation of outstanding checks. The system also provides an imaged copy of thecheck in question, so that the signatore on the check can be quickly confirmed. All district officesare using the system, allowing quicker processing on check tracers. In addition, an on-line CheckRegister has been established, to facilitate obtaining the information necessary to trace a payment. More importantly, these steps greatly improve the response time between the Treasury and theDFEC, allowing the agency to properly re-issue or cancel checks as necessary.

2. The DFEC has created a new position (Fiscal Operations Specialist) which has been chargedwith tracking all check trace requests. The individual assigned to that position will request tracersfrom the Treasury, and either re-issue or cancel payments, as necessary. More importantly, theindividual will also be required to track all related actions, to insure that credits are posted timelyand duplicate payments due to lost or stolen checks are avoided.

This recommendation should be resolved and closed.

OIG’s Conclusion:

This recommendation is resolved and open. Closure is dependent on the effectiveness of thecorrective actions which have been implemented which will be evaluated during our next fiscalyear’s audit.


2. Procurement

Current Year Findings and Recommendations

a. Purchases that exceed $2,500 micro-purchase limit

The Department of Labor requires the use of credit cards for all micro-purchases wheneverpossible. A micro-purchase is defined as being any authorized purchase which does not exceed$2,500 (including freight charges).

In BLS, for the 3 months tested, two credit card statements had purchases that exceeded the $2,500threshold. One incident occurred as a result of the shipping charges being higher than expected. The second incident occurred when a cardholder was able to make a purchase which exceeded thethreshold although the card had a $2,500 single purchase limit.

These transactions violate the FAR Part 13.301 (c) and Departmental policy. Purchases in excessof $2,500 should not be made with the credit card.

Recommendations

We recommend that the Chief Financial Officer and the Assistant Secretary forAdministration and Management:

1. ensure that the purchase limits on the cards are properly established and are functioning (i.e.,work with Citibank and perform tests of these limits); and

2. adequately monitor purchases to ensure that single purchases do not exceed the $2,500 limit.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. The Division of Departmental Procurement Policy (formerly OAA) has received a numberof memoranda from FMSC concerning potentially split purchases. There will always be thenecessity to make judgment calls on these items, as sometimes purchases to the same vendor fordifferent items, or on different dates, may be true fragmentation, or may be legitimately differentneeds, supporting different offices, for example. This office will plan to meet with personnel fromFMSC to determine a better way of identifying purchases that are truly fragmented. At the sametime, however, it is necessary to note that the Department, in a joint effort of OASAM/BOC andthe OCFO, is exploring greater use of the credit card as a payment mechanism for items greaterthan the micropurchase threshold which are obtained through GSA Advantage! or from a FederalSupply Schedule contract. The Department’s Procurement Executive will also issue amemorandum to all purchase cardholders and approving officials, reminding them of theirresponsibility to adequately monitor purchases to ensure that the single purchase limit is notexceeded. We will also obtain a list of cardholders who have single purchase limits above $2500in the CitiBank system, to be used in discussion with the agencies for corrective action.

OIG’s Conclusion:


We acknowledge that detecting split purchases requires judgment and recognize that FMSC hastaken steps to better detect split purchases, but this particular finding is concerning singlepurchases which exceed the $2,500 micropurchase threshold, not split purchases. Detecting singlepurchases in excess of the limit should be relatively straightforward.

We acknowledge that increasingly the purchase cards will be used to make payments (which canexceed the $2,500 limit) from an existing procurement, in addition to using it as a purchasemechanism. This can create problems if there is not adequate information readily available for theApproving Official or management to determine which type of transaction it is, and thus itsallowability.

Therefore, we believe it is important that adequate controls are established to ensure that thedistinction between a payment and a purchase is clear. Also, limiting the number of people whoare authorized to use the card to make payments would also strengthen controls.

Issuing a memorandum to cardholders and approving officials reminding them of theirresponsibilities may be a good idea, but we do not believe this will adequately address ourconcerns, as the monitoring by the approving officials does not appear to be effective.

Finally, although following up on cardholders who have a single purchase limit in excess of $2,500may be beneficial, management’s response did not address the need to work with CitiBank to makesure these limits are functioning properly. As stated in our finding, we found an instance where acardholder was supposedly limited to $2,500 for a single purchase, but this control was notfunctioning properly and was violated by the cardholder and not detected.

Because we do not believe that management’s response adequately addresses these concerns, thisfinding is unresolved, pending receipt of an acceptable corrective action plan.


Audit results for FY 1999 identified missing credit card statements and supporting documentation. In addition, our FY 1998 audit results identified that the DLMS had not been updated andproblems existed with ETA cardholders fragmenting credit card purchases to avoid the $2,500threshold for micro-purchases.

Missing credit card statements and supporting documentation

In FY 1999 we reported that BLS, ETA, and OSHA had many cardholder statements missingfrom Servicing Finance Office (SFO) files. In addition, supporting documentation for many of thecredit card charges lacked adequate documentation, such as, receipts, invoices, packing slips, andother supporting documentation.

In the FY 1999 management advisory report (OIG Report No. 12-00-006-13-001), werecommended that the Chief Financial Officer and the Assistant Secretary for Administration andManagement:


• Revise the credit card policies to clarify what documentation agencies must maintain tosupport credit card purchases.

OASAM indicated they believed the policies clearly stated what documentation is required forcredit card purchases. BLS disagrees with these policies and wants them to be revised. They donot believe that original invoices, receipts, etc., are needed to be maintained. ETA believes that thepolicy does not require receipts to be maintained after payment is made to Citibank. OSHAindicated they intend to address this issue.

Because there clearly is some confusion and disagreement, this recommendation is now unresolvedpending receipt and review of a corrective action plan. Also, we recognize that the Department ispiloting an online credit card system. We believe the implementation of any new system mustadequately address the documentation issue.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. The Department’s purchase card manual is in the process of being revised, and a draft hasbeen provided to the “Proof-of-Concept” group (POC), comprised of personnel from OASAM andfrom OCFO. This group is working addressing issues related to invoice processing using the cardvendor’s on-line payment system (CitiDirect), and relating to threshold issues as they affect theDepartment’s credit card rebate. The current draft of the manual will require that documentationbe retained for three years, and institutes training requirements for card holders who will use thepurchase card for purchases above the micropurchase threshold as a payment mechanism only. Open market single purchases using the card continue to be prohibited above the micropurchasethreshold of $2500.

Completion of the purchase card procedure revisions is expected by the end of July, when it willhave been reviewed and approved by the POC team; it will then require circulation andconcurrence of stakeholders and we anticipate final publication within the Department before theend of the fiscal year.

In a prior finding, it was noted that update to the DLMS is also required (DLMS 2 Chapter 830). Please see response below under that heading.

OIG’s Conclusion:

This recommendation remains unresolved, pending receipt and review of the draft manual andreceipt of a timeline for completion.

• Establish procedures for all agencies to follow and identify the consequences of instances ofmissing cardholder statements or lack of adequate documentation.

OASAM has indicated they will review the credit card procedures manual and determine if anychanges are necessary; however, they have not implemented any Department-wide procedures onthis matter. Although BLS and ETA have both indicated that they have new policies regarding therevocation of credit cards as a result of missing statements or documentation, there is not


consistency throughout the Department in these matters. Therefore, this recommendation remainsresolved and open, pending review of the corrective action during our FY 2001 audit.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. Revocation of credit cards as a result of missing statements or documentation is an optionto all program officials who have oversight of their credit card programs, not just to BLS andETA. Additional guidelines for when such revocation is advised will be incorporated into therevised Procedure Manual. The Department has approximately 1600 cardholders. Due to limitedresources needed to conduct such reviews DOL-wide, the Procurement Executive will issue anApproving Official’s Self Certification Checklist for use by agency approving officials to promotecompliance. In addition, survey questions will be sent to these officials and responses used as anindicator of the need for additional technical assistance.

OIG’s Conclusion:

This recommendation remains resolved and open, pending review of the corrective action duringour FY 2001 audit.

• Ensure that cardholders, approving officials, and other financial management andprocurement staff are trained in the Department’s credit card use procedures and in theirrespective responsibilities.

OASAM indicated they will conduct training when the CitiDirect online program is implemented inthe pilot agencies. As of September 30, 2000, there had not been any formal training. Therefore,this recommendation remains resolved and open, pending review of corrective actionimplementation during our FY 2001 audit.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. Training in the use of the CitiDirect system has been implemented for those individualswho are participating in the pilot program (“Proof-of-Concept”), and will be provided prior togeneral implementation of the use of CitiDirect. In the interim, the Procurement Executive willsurvey the agencies to assess their need for training and their commitment for participation.

OIG’s Conclusion:

This recommendation remains resolved and open, pending review of the corrective action duringour FY 2001 audit.

In FY 1999, we recommended that the Chief Financial Officer, as well as the Commissioner of theBureau of Labor Statistics, the Assistant Secretary for Employment and Training, and theAssistant Secretary for Occupational Safety and Health:


• Ensure that the cardholders, approving officials, finance office, and procurement office staffadhere to requirements in the Procedures for Use of Credit Cards for Micro-Purchases(Revised May 17, 1999) regarding the timely submission of monthly cardholder statements andthe inclusion and review of supporting documentation.

During FY 2000, BLS established a new policy that would revoke the credit cards of thosecardholders with missing statements. In addition, BLS provided credit card training to cardholdersand approving officials. While we noted improvement, 46 of the 180 statements we tested were notavailable at the time of our audit. BLS did subsequently provide all of these except one. Regarding the supporting documents, BLS believes that receipts are not needed because theapproving official approves the purchases before payment is sent to Citibank.

We believe that cardholders should be responsible for maintaining the documentation to support thepurchase. This is necessary for the review of the purchases. The statements do not provideadequate evidence to determine what was purchased. We believe that original receipts, packingslips, etc., will provide stronger evidence as to what was actually purchased, as opposed to whatmay have been requisitioned. Additionally, we do not believe that requiring the cardholders tomaintain receipts and attach them to the statements places a significant burden on the cardholdersor the finance offices. Therefore, with respect to BLS, this issue is still resolved and open.

Our testing of a sample of ETA statements did not reveal any missing statements ordocumentation. However, 7 of the 22 statements tested were not available at the time weperformed our initial testing. All of these were subsequently provided to us. ETA begancanceling the cards of those who have not complied with the procedures. Because the statementsare still not submitted timely, with respect to ETA, this issue is now resolved and open.

Our FY 2000 testing revealed 6 missing and 4 untimely statements of the 40 we tested at OSHA. OSHA staff said this oversight occurred during a period of employee transition. OSHA says it hasmade its staff aware of the Department’s procedures to ensure that this oversight does not happenagain. Since there has been no significant improvement, with respect to OSHA, thisrecommendation remains resolved and open.

When statements are not submitted timely or when documentation is missing, it is not possible todetermine if the charges made are proper. At BLS, one of the cardholders is being investigated forpossible unlawful and/or fraudulent charges. This cardholder did not submit the statement timelynor have appropriate documentation.


BLS has taken appropriate action to ensure compliance with DOL policy regarding the timelysubmission of monthly cardholder statements and the inclusion and review of supportingdocumentation. The BLS reduced the purchase limits of all BLS cardholders to 1 cent at thebeginning of FY 2001 and these limits were not raised until the individual cardholders attended atraining session on the use of the purchase cards and their individual responsibilities. Cardholderssigned a statement that they attended this training and understood their responsibilities, including


requirements for timely submission and supporting documentation. The BLS procurement office,which has oversight responsibility for the BLS credit card program, has rigorously followed upwith cardholders and their approving officials in order to ensure that all statements are received ina timely manner. These steps have resulted in a zero backlog of missing statements and atremendous increase in the quality of the supporting documentation that is received from thecardholders.

OSHA has conducted credit card training for all card holders and approving officials as agreed toin our 1999 response. Procedures for Use of Credit Cards for MicroPurchase (Revised May 17,1999), was used as the source reference for instructional material for the training, with emphasison credit card statement documentation. OSHA will continue to follow OASAM policies andprocedures. We also completed a process review within OSHA and implemented several changesto the process which hopefully will address some of the deficiencies identified in the past audits.

OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. Procedures regarding the timely submission of monthly cardholder statements and theinclusion and review of supporting documentation will be included as part of the aforementionedApproving Official’s Self-Certification Checklist.

OIG’s Conclusion:

With respect to BLS and OSHA, this recommendation remains resolved and open, pending reviewof the corrective action during our FY 2001 audit.

Because ETA did not respond nor provide a corrective action plan, this recommendation is changedfrom resolved and open to unresolved, pending receipt and review of a corrective action plan forETA.

Updating the DLMS

In the FY 1998 management advisory report (OIG Report No. 12-99-009-13-001), werecommended that the Chief Financial Officer and the Assistant Secretary for Administration andManagement:

• Ensure that the DLMS is updated to reflect recent changes in procurement law and establishprocedures to identify changes in the law and update the DLMS timely.

Some sections of the DLMS pertaining to procurement have not been updated since 1976. Certainchanges have been handled as memoranda to the agencies, but most have not been formalized intothe DLMS, which is the official policy manual for the Department. This lack of formal policy hasleft the agencies on their own without direction in the procurement function resulting in diverseimplementation of the Federal Acquisition Regulation (FAR).


Since the DLMS has not been updated, there is insufficient and inadequate documentation ofdepartmental procurement policies and procedures, which has resulted in inconsistentimplementation of the procurement requirements in the FAR.

This issue has not been addressed by the Department; therefore, this recommendation remains unresolved, pending receipt and review of a corrective action plan.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. The last OIG report also addressed the update of the Department of Labor AcquisitionRegulations (DOLAR), as well as the DLMS. Because the DOLAR is a derivative regulation ofthe Federal Acquisition Regulation, and the DLMS provides further departmental procedures toimplement both FAR and DOLAR, the revision of the DOLAR received higher priority thanrevision of the DLMS. At present, a draft revision for the first half of the DOLAR is in circulationfor informal review by stakeholders, and we anticipate publication as a proposed rule before theend of the year. The second half of DOLAR has been preliminarily revised and will be offered forreview shortly after the first half is approved. This sequence of events will allow for revision ofDLMS after the DOLAR is published as a proposed rule, because it is necessary to maintainconsistency among these documents. We anticipate beginning the revision to the DLMS during thefourth quarter of 2001, and obtain agency review and clearance during the first quarter of 2002.

OIG’s Conclusion:

This recommendation is resolved and open, pending review of the corrective action during our FY2001 audit.


3. Accounting for Non-Payroll S&E Accounts Payable

Current Year Finding and Recommendation

a. Working Capital Fund

The New York Centralized Administrative Support Unit (CASU) underestimated theirrequirements for services provided through the Working Capital Fund (WCF) in FY 2000. Thiscould have resulted in a potential Anti-Deficiency Act violation had the Department not identifiedthe shortfall and submitted to OMB a fourth quarter apportionment request for additional funding. The signed apportionment was returned to the Department in mid-September, and contractmodifications for the additional obligational authority were submitted by the CASU at fiscal year-end. However, the services to be paid for with these funds were received throughout the fourthquarter. Our testing revealed that 3 CASU documents out of the 25 WCF documents in the samplehad obligations posted on or near September 30th relating to expenses incurred earlier in the fourthquarter.

Because the Department was monitoring these funds independently from the CASU, a timelyapportionment was submitted which prevented the potential violation of the Anti-Deficiency Act. However, it appears that due to the rapid growth and expansion of services, the New York CASUlacks the necessary internal controls to adequately determine its costs and to obtain the necessaryfunding on a timely basis.

OMB Circular No. A-123, Revised, paragraph II. Establishing Management Controls states:

. . . Management controls developed for agency programs should be logical, applicable,reasonably complete, and effective and efficient in accomplishing management objectives. . . .

Recommendation

1. We recommend that the Chief Financial Officer and the Assistant Secretary forAdministration and Management ensure that an onsite review is conducted of the New YorkCASU operations and internal controls for developing adequate funding estimates forservices provided through the WCF.


OASAM concurs with this recommendation and has implemented procedures to ensure compliancewith it. As background, the Cooperative Administrative Support Unit (CASU) is a self-sustainingbusiness unit that provides services to the Department of Labor (DOL) and other federal agencieson a cost-reimbursable basis. As such, the Northeast Regional CASU must compete with othermembers of the CASU network for new customers and business. Several members of the CASUstaff have as their primary responsibility the development of new customers and business. Becauseof these efforts, the CASU adds new customers throughout the year and has the potential to addcustomers that, at the beginning of the year, would have been difficult to foresee.


We strongly concur with the recommendation that an on-site review of the CASU’s financialoperations and internal controls should be conducted. Pursuant to this, the CASU has hired anindependent CPA firm (Goff, Backa & Alfera) to conduct this review. The review will begin inmid-June and results are expected to be presented to CASU and OASAM management bySeptember. The issues to be addressed in the review include the timeliness of the CASU’s invoicingprocedures, type and form of collections, accounting controls for collections, effectiveness of theinteraction between the CASU and DOL, as the host agency, in handling and accounting for CASUfunds, overall completeness and accuracy of the CASU’s financial records, and the preparation ofa balance sheet.

In addition, we have established a panel of DOL managers from the OASAM Business OperationsCenter, Office of Budget, Procurement Services Center, Financial Management Services Center(FMSC), the CASU and the Boston/New York OASAM whose mission is to develop a 5-YearBusiness Plan for the CASU. Issues to be addressed by the Plan will be “managed growth” andinternal controls. This group had its first meeting in May 2001 and will be meeting again later inJune. A final draft of the plan is expected to be available for OASAM Executive staff review bythe end of this fiscal year. The CASU will also address internal control issues through the staffingprocess by adding a Resource Management Analyst GS-501-12 to the staff. This position will beexpected to play a key role in planning and tracking the use of financial resources. The incumbentwill be expected analyze CASU financial data to identify trends that may require the CASU tospending patterns. It is expected that vacancy recruitment for this position will commence in earlyJune.

Finally, in order to improve cooperation with the OASAM National Office, CASU has arranged toconduct formal meetings on a semi-annual basis with the Director of the FMSC and members ofthe FMSC staff. The purpose of these meetings will be to review budget performance, identifytrends and patterns and utilize that information to assist in financial planning for the CASU. Thefirst such meeting has already taken place and we expect to have at least one more prior to the endof the current fiscal year.

OIG’s Conclusion:

This recommendation is resolved and open, pending review of corrective action implementationduring the FY 2001 audit.


Documentation for Year-End Accrual Estimates and Prior Year Unliquidated Obligations

On August 10, 1998, OCFO issued a memorandum on Documentation for Year-end AccrualEstimates and Prior Year Unliquidated Obligations which defined procedures by document typefor calculating year-end accruals and for adequately documenting these estimates. Thememorandum also required that periodic reviews be made of unliquidated obligations, and that allServicing Finance Offices (SFOs) certify, in writing, to OCFO that obligation balances greater that$1,000 were still valid.


The SFOs in FY 1998 regarded the memorandum as “optional” based on the resources available. Because these procedures have not been incorporated into the DLMS and the memorandumaddressed FY 1998 only, SFOs did not perceive these guidelines as required.

As a result, in the FY 1998 management advisory report (OIG Report No. 12-99-009-13-001), werecommended that the Chief Financial Officer:

• Incorporate procedures which were issued in the OCFO memorandum dated August 10, 1998,concerning year-end accrual estimates and periodic review of unliquidated obligations into theDLMS.

On August 30, 2000, the OCFO revised its guidance and issued new procedures. Althoughmanagement previously indicated they will prepare a plan to incorporate the year-end proceduresinto the DLMS, we found no evidence that this has been done. Therefore, this recommendationremains unresolved pending completion and review of a plan to make year-end accrual guidanceinto permanent procedures.


The OCFO is currently gathering information on various types of accruals to determine if a DLMSchapter is needed.

OIG’s Conclusion:

This recommendation remains unresolved pending the receipt and review of a corrective actionplan.

Accounts Payable

In the FY 1995 management advisory report (OIG Report No. 12-96-016-13-001), werecommended that the Chief Financial Officer:

• Expand existing OCFO guidance on year-end procedures for accrual estimates to includespecific instructions for calculating accruals and documenting estimates.

Audit results for FYs 1995 through 1999 showed that agency and regional finance offices were notadequately reviewing documents at fiscal year-end to determine whether an accrual for goods orservices received should be recorded. OCFO issued a memorandum to the agency and regionalfinance offices, in September 1996, in August 1998, and in August 2000, which addressed thisissue and implemented new procedures.

We noted improvements in the Department’s accrual processing for purchase orders during ourtesting in FY 2000. The Accounts Payable Subsystem enhancement in DOLAR$ and the revisedguidance provided by the OCFO memorandum dated August 30, 2000, have simplified recordingthese accruals throughout the Department. However, the results of our testing found 34 out of 196documents (17 percent) still had accrual errors. We found that OSHA and ETA have not


implemented the OCFO’s guidance regarding the accruals, and FMSC did not accrue all of itscontracts this year.

This recommendation is now resolved and open, pending review of effective corrective actionimplementation.


The Acting CFO will send the Administrative Officers for OSHA, ETA, and FMSC a memorequesting assistance in ensuring that their staff follow the procedures outlined in the August 30,2000 guidance memorandum.

OIG’s Conclusion:

This recommendation is resolved and open, pending review of corrective action implementationduring the FY 2001 audit.


4. Black Lung Disability Trust Fund


Lack of Detailed Reconciliation of the Statement of Differences

The FY 1999 DOL Management Advisory Comments (Report No. 12-00-006-11-001) made tworecommendations concerning the lack of reconciliation of the Statement of Differences receivedfrom Treasury.

We recommended that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure that the Division of Coal Mine Workers’ Compensation:

• develop policies and procedures for the reconciliation of the Fund Balance with Treasury; and

• document the reconciliations and subsequent supervisory review of the reconciliations.

Completion of the documentation is targeted for the First Quarter of FY 2001. Bothrecommendations remain resolved and open.


Professional staff in the accounting section completed training sessions provided by the TreasuryDepartment. The accounting section adopted Treasury guidelines for achieving reconciliation. Supervisory review has not identified significant discrepancies in the process. DCMWC willcontinue to work with counter part staff at Treasury to perfect reconciliation of the Statement ofDifferences.

A memorandum by the Chief of Accounting to the Accounting Staff documents the procedures thatare followed to reconcile the statement of differences at the desired level of detail.

This initiative is completed.

OIG’s Conclusion:

These recommendations are resolved and open. Closure is contingent upon the reconciliationsbeing performed as specified in the November 1999 Supplement to the Treasury Financial Manual,ITFM 2-5100, and upon our review of the implementation of the memorandum by the Chief ofAccounting to the Accounting Staff.

Inaccurate RMO Accounts Receivable Balances

The FY 1999 DOL Management Advisory Comments (Report No. 12-00-006-16-001) made fourrecommendations concerning RMO Accounts Receivable Balances sent to the Solicitor’s Office. These accounts often remain at the Solicitor’s Office for extended periods of time but are notupdated as appropriate while there.


We recommended that the Chief Financial Officer and the Assistant Secretary for EmploymentStandards ensure that the Division of Coal Mine Workers’ Compensation:

• inventory the RMO accounts receivable forwarded to the Solicitor’s Office no less frequentlythan once a year and reconcile amounts to the Solicitor’s records;

• update each account receivable as required, including disability benefits and medical billpayments paid during the year;

• ensure that interest is not recorded on cases at the Solicitor’s Office; and

• review all uncollectible RMO accounts receivable forwarded to the National Office BAE noless frequently than once a year and ensure that:

SS the accounts are updated for new activity;SS no interest has been accrued on these receivables; andSS any necessary adjustments required are recorded.

The first reconciliation is targeted for the first quarter of FY 2001. This activity will encompassall four recommendations. All four recommendations remain resolved and open.


(Note: The fourth recommendation incorporates the previous three!)

As recommended, DCMWC staff is reviewing the enforcement case files and updating accountsreceivable where appropriate. Staff of the Enforcement Section is conducting the review andupdating of accounts during the second and third quarter of the fiscal year as an annual event. Interest accruals will be noted and corrected where appropriate.

OIG’s Conclusion:

These recommendations are resolved and open. Closure is contingent upon our review of theimplementation of the corrective action plan.

Accounting for Bankruptcy Accounts Receivable

The FY 1996 DOL Management Advisory Comments (Report No. 12-97-013-04-433) reportedthat the Black Lung Disability Trust Fund does not have a properly designed accounting policy forbankruptcy-related transactions. The report recommended that:

• The DCMWC Director, in conjunction with assistance from the Chief of the AccountingSection, should pursue the modification of existing accounting policies to include bankruptcyaccounts receivable activity. The DCMWC Director should also initiate the following actionsto properly record known bankruptcy account receivables:


- clear the suspense accounts for all bankruptcy related collections; and

- record all the accounts receivable from bankruptcy settlements and identify the sourceof any future settlement due.

During FY 1999, DCMWC cleared the suspense account of all bankruptcy-related collections bysetting up a new account receivable in the amount of the payment that had been received. However, the collections were not posted to the individual accounts receivable which were settledby these payments. Instead, a new account receivable showing the amount of the payment (a creditbalance) was recorded. This causes the control GL account balance to be correct, but does notadjust the detail.

DCMWC indicated that since bankruptcy settlements are often for a lower amount than the sum ofthe claims, they lack the guidance to identify which specific claim should be credited with thepayment (e.g., should certain claims be credited and others not, or should the payment beproportionally allocated to each individual claim involved in the settlement).

After discussions with DCMWC, management has agreed that when a settlement is reached, all theclaims involved in the settlement will be deleted and a new single claim in the amount of thesettlement will be recorded. This recognizes the economic substance of the transaction, whichsubstitutes the settlement amount for the sum of the individual claims. Since settlements are often(but not always) for a lower amount than the sum of the claims, the difference will be charged tothe allowance for bad debts. Since noncompliance with the terms of the settlement may result in theindividual claims becoming receivables as a result of a default event, management further agreesthat a proper audit trail supporting the recording of the entry discussed above will be created toproperly reinstate the individual claims if this becomes necessary as a result of default. During FY2000, there was no material change in the status of work in this area.

This recommendation remains resolved and open. Closure is dependent upon identifying andwriting off all the individual RMO accounts receivable affected by the payments from bankruptRMOs that were removed from the suspense account.


During previous years the program resolved many of these accounts as reported by DCMWC inearlier responses. The accounting section identified remaining individual RMO accountsreceivable affected by payments from bankrupt RMOs that were removed from the suspenseaccount. These accounts were resolved in May of 2001.

OIG’s Conclusion:

This recommendation remains resolved and open. Closure is contingent upon verification thataccounts receivable of bankrupt RMOs have been consolidated into a single claim and recorded inthe amount of the settlement amount.


Cost Containment for Medical Payments

The FY 1997 DOL Management Advisory Comments (Report No. 12-99-001-13-001) reportedthat the Black Lung Disability Trust Fund could save money on payment of medical bills for bothinpatient hospital services and professional services through the use of negotiated schedules. Thereport recommended that:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat a plan is developed to identify cost containment techniques, including use of Medicarepayment schedules where appropriate, that can be used to maximize the resources available tothe program.

DCMWC is unable to work on significant improvements in this area until the client/serverenvironment is implemented in approximately February 2001. Because no corrective action planhas been developed, this recommendation remains unresolved.


DCMWC reported that significant improvements in this area are anticipated when the client/serverenvironment is fully operational. This system was implemented on April 9, 2001. Additionally, theprogram has already undertaken a number of steps to improve the management of the medical billpayment process. Since the original report was written, the Branch responsible for bill paymentoversight has been reorganized to better devote resources to payment oversight. Employees havereceived training in fraud prevention and detection techniques. Payment files are routinely auditedto detect suspicious patterns and activities. Finally, effective July 1, 2000, DCMWC adopted theHCFA allowable rate for oxygen concentrator rentals and supplies. Additional enhancements tothe new client server system will begin in the fourth quarter FY 2001.

OIG’s Conclusion:

This recommendation is now resolved and open. Closure is contingent upon implementation ofadditional enhancements to the new client server system, as well as verification of improvementsreported by DCMWC during testing of medical bill payments in the FY 2001 audit.

Suspense Account in Black Lung Accounting System (BLAS)

The FY 1998 Management Advisory Comments (Report No. 12-99-009-013-001) reported that theBlack Lung Accounting System (BLAS) had a suspense account with a balance of approximately$7.5 million as of September 30, 1998. Many amounts in the suspense account relate to complexbankruptcy issues or repayment of funds embezzled by former employees. The account alsocontains unresolved cash receipts dating back to 1985. Because of this situation, individualaccounts receivable in BLAS do not always reflect the correct balance. The report recommendedthat:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat the suspense account is substantially cleared and procedures developed to ensure it


remains only a temporary clearinghouse for unidentified receipts. Procedures should includethe following:

- Research amounts in the suspense account, beginning with the amounts in the accountfor the longest period of time, i.e., starting with 1985 amounts.

- Determine whether these amounts belong to BLDTF, and if so, if they should becredits against accounts receivable.

- Identify amounts in the suspense account that are not associated with either a districtoffice or the national office.

- Assign responsibility for resolving the amounts.

- Develop an accounting solution for disposition of monies received that belong to theBLDTF but are non-claimant related (e.g., monies embezzled). These amounts shouldnot remain in the suspense account indefinitely.

During FY 2000, no material change was made in the suspense account. On September 30, 2000,the balance in the suspense account was approximately $1.5 million, compared to $1.7 million 12months earlier. Management agreed to remove items that have been in the suspense account longerthan 6 years. DCMWC is considering the remaining accounts that could include the most difficultto resolve.

This recommendation remains resolved and open. Closure is dependent upon verification that substantially all of the older receipts have been removed and properly disposed of, and that the

account is used only as a temporary clearinghouse for unidentified receipts.


DCMWC staff continues to perform the type of analysis recommended by OIG prior to submittingunidentified receivables to the suspense file. As resources permit, staff will review these accounts. Furthermore, accounts receivable continue to be routinely compared to the suspense files fordiscernible matches. The suspense file, which was reduced from $7.5 million in FY 1998 to $1.5million in FY 2000, is currently a reference source in resolution of medical provider overpayments. Nevertheless, older amounts that cannot be identified with specific program receivables will beremoved from the suspense file based on the advice and consent provided by the OIGrecommendation. Prior to the OIG recommendation, DCMWC staff was reluctant to dispose ofsuspended items based on age alone.

Further elimination of older suspense items will be completed when an automated protocol can bedeveloped to accomplish the task and provide backup documentation. As noted above,enhancements to the new system will begin in the fourth quarter, FY 2001.


OIG’s Conclusion:

This recommendation remains resolved and open. Closure is dependent upon verification thatsubstantially all of the older receipts have been removed and properly disposed of, and that theaccount is used only as a temporary clearinghouse for unidentified receipts.

Incorrect Recording of Responsible Mine Operators (RMO) Accounts Receivable

The FY 1998 DOL Management Advisory Comments (Report No. 12-99-009-13-001) reportedthat claims examiners establish RMO accounts receivable before a final decision and order areissued, and that in some cases accounts receivable are incorrectly computed. The reportrecommended that:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensure thedevelopment of a checklist or worksheet identifying avenues of appeal and require that thechecklist be used to document the completion of each step in the process, as well as thecalculation of the receivable. The completed checklist should be reviewed and approved bymanagement and included as part of the formal accounts receivable documentation prior torecording an account receivable.

As a result of findings in the FY 1999 audit, we concluded that BLDTF’s policy of not recording areceivable until every possible appeal has been exhausted is difficult to follow and in several casessubjective. Further, compliance with the policy often requires deleting receivables that werepreviously recorded because new appeals arise. This condition unduly complicates thebookkeeping process and very likely is the cause behind the errors we have noted during the audit. DCMWC management proposes to add a code to those RMO accounts receivable cases that are inlitigation so that they can be readily identified. This action cannot be taken until after theclient/server environment is implemented.

During FY 2000, no improvement was made in this area as the client server environment has notyet been implemented. This recommendation remains resolved and open. Closure is dependent ondocumentation that RMO accounts receivable in litigation are identified and included in theallowance for bad debts.


DCMWC management proposed in previous audits to add a code to those RMO accountsreceivable cases that are in litigation so they can be more readily identified. This will be developednow that the client/server system has been implemented. A completion date for this enhancementand all others will be established once all the enhancement requests are evaluated and prioritized. As noted above, this process will begin in the fourth quarter, FY 2001.


OIG’s Conclusion:

This recommendation remains resolved and open. Closure is dependent on DCMWC adding acode to those RMO accounts receivable that are in litigation so they can be readily identified andincluded in the allowance for bad debts.

Accruing Interest on Accounts Receivable Due from Bankrupt Entities

The FY 1998 DOL Management Advisory Comments (Report No. 12-99-009-13-001) reportedthat interest was being accrued on accounts receivable of 12 bankrupt RMOs. This practiceoverstated accounts receivable. The report recommended that:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat necessary programming changes are made so that interest does not accrue on an accountreceivable once it is classified as bankrupt. In the interim, accounting personnel should beinstructed to change the interest rate due on the account receivable to “zero,” once it isdetermined that the account receivable is due from a bankrupt entity.

Management believed that the objectives of this recommendation could be achieved without systemchanges and proposed to prepare and issue a memorandum advising of the need to change theinterest rate to zero when it is determined that the account receivable is from a bankrupt entity.

During FY 2000 interest accrued since the date of bankruptcy decreased by $200,597 (from$595,554 at September 30, 1999 to $394,957 at September 30, 2000). Also during FY 2000,interest of $3,309 accrued on a bankrupt RMO. This recommendation remains resolved andopen. Closure is dependent on OIG receipt of documentation showing that interest has beenremoved from the accounts and will not accrue on the accounts in the future, except in thoseisolated situations where it is appropriate.


As recommended, once accounting personnel determine that an account receivable is due from abankrupt entity, the interest rate due on the account receivable is changed to zero. When theseevents occur, DCMWC staff will retain documentation of the relevant transactions for the auditfile.

OIG’s Conclusion:

This recommendation remains resolved and open. Closure is dependent upon whether interest hasbeen removed from the accounts receivable of bankrupt RMOs which will be determined during theFY 2001 audit.


Allowance for Bad Debts

The FY 1998 DOL Management Advisory Comments (Report No. 12-99-009-13-001) reportedthat the allowance for bad debts was understated by approximately $2,400,000. Program policies,accounting systems support and availability of information are all factors which are responsible forthis understatement or hinder the development of proper estimates. The report made the followingfour recommendations:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat the following reports and information be produced from BLDTF’s databases:

- Identification of bankrupt RMO accounts receivable- Amounts due from each RMO- Accounts receivable agings by type of account receivable and by both date of

last payment and date of service.

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat an alternative benchmark is developed to define an uncollectible account, such as theaccount’s aging (for example, 1 or 2 years without any collections).

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat historical data (percentage of receivables collected) is developed to predict the collectibilityof accounts by age and account type (e.g., RMOs, bankrupt RMOs, individuals).

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat the percentages developed above are applied to each aging/account type category tocalculate the allowance for bad debts.

During the FY 1999 audit, we advised that to resolve, management should provide a correctiveaction plan that addresses all four recommendations, as well as the additional issues noted duringFY 1999. Where the specific identification method is not feasible or practical, the corrective actionplan should include a write-off policy that is linked to a predetermined period of time when nocollections are received. Write-offs must be recorded in the accounting system according to thepolicy (or, if this is not practical, write-offs must be coded for identification and included as part ofthe allowance account). Percentages used to calculate the allowance account must be updatedannually.

These recommendations remain unresolved. During the FY 2000 audit, we found thatmanagement does produce a report listing all bankrupt RMOs. However, this report does not showamounts due for each claimant and the total owed by each RMO. Accounts receivable are not agedby both date of last payment and date of service. We also found that management still had notdeveloped an alternative benchmark to define an uncollectible account.

Also, during FY 2000, DCMWC proposed a plan that includes collection of data for a 3-yearperiod to include the categories cited by OIG as not previously included. In the interim, historicaldata based on the percentage of receivables collected and written off will be used to calculate theallowance for bad debts. The program will attempt to automate this procedure no later than


September 30, 2001. Categories not previously included in the allowance that require developmentof a new database, will be included when the 3 years of experience is available. Managementbelieves that they would not have enough data until FY 2002. We believe that this data are alreadyavailable as a by-product of the quarterly SF 220, Schedule 9 reports submitted to Treasury. Management should develop a percentage to apply to all accounts receivable for determining theallowance for bad debts based on this available data.


DCMWC will continue to collect data for a three-year period to include the categories cited byOIG as not previously included. Automation of the data may be delayed from the 9/30/01 targetdate pending enhancements to the recently implemented client/server system. Historical data usedin the Schedule 9 is essentially the same as that which produced the allowance level the OIGrejects. Nevertheless, DCMWC staff would be pleased to discuss with the auditor how theSchedule 9 data could be used to produce a more accurate allowance.

OIG’s Conclusion:

These recommendations remain unresolved. Resolution is dependent on management establishinga corrective action plan that addresses all four recommendations. Where the specific identificationmethod is not feasible or practical, the corrective action plan should include a write-off policy thatis linked to a predetermined period of time when no collections are received. Write-offs must berecorded in the accounting system according to the policy (or, if this is not practical, write-offsmust be coded for identification and included as part of the allowance account). Percentages usedto calculate the allowance account must be updated annually.


5. Wage and Hour’s Back Wage and Civil Monetary Penalties (CMP) Systems


In our FY 1992 audit (OIG Report Nos. 03-94-008-04-001), we made several recommendations tothe Assistant Secretary for the Employment Standards Administration relating to the Wage andHour’s Back Wage and CMP Systems. These five recommendations are being tracked for auditresolution purposes even though they are similar to recommendations made subsequently to theOCFO and ESA because they establish the date OIG brought these weaknesses to ESA’s attentionfor correction. These five recommendations and their status are as follows:

Civil Monetary Penalties

We recommended that the Assistant Secretary for Employment Standards instruct the Wageand Hour Division to do the following:

• establish procedures whereby at the end of each month a listing of outstanding employer civilmoney penalty receivables is prepared by each of the regional and district offices;

• once the information is gathered, reconcile the information to the CMP receivable balancecalculated at the National Office and make appropriate adjustments to the records; and

• once the procedures are established, responsible personnel should monitor the performance ofthese procedures.

During our FY 2000 audit, we found that the system is not recording information accurately,timely, reliably and consistently. Primary problems noted in the FY 2000 audit were that the CMPsystem continues to lack a proper cutoff of accounting periods and the ability to close accountingperiods. In addition, we found problems with the calculation of interest and recording errors.

Although we noted progress in the development and implementation of system features andimprovements in the recording of information accurately, these recommendations remain resolvedand open. Closure is dependent on our review of continued corrective actions in the monthly andyearly cutoff and closing of accounting periods and steps taken to correct problems with therecording of interest.


Wage and Hour has established and implemented an automated system that features operationaland administrative procedures sufficient to ensure proper recording and tracking of civil monetarypenalties assessed. We note the FY 2000 audit found that certain improvements are necessary toensure the timeliness in the recording of account receivable balances. As a result we havereemphasized the established “Final Order” policy and procedures in place that require the accurateand timely recording of accounts.


Additionally, in reviewing the interest calculation errors found, we think the errors relate primarilyto the front-end loading of interest on accounts. Although interest amounts reported on accountsare not material to the total CMP revenue totals accounted for in the system, we recognize thatfront-end loading of interest in the account receivable balance is not appropriate. Accordingly, weare changing our methods of accounting for installment accounts to allow for interest to be accruedwith the passage of time. These changes should be implemented no later than August 31, 2001.

While the FY 2000 audit noted that certain accounting improvements are needed, Wage and Hourconsiders the recommendations to have been substantially met and, therefore, should be closed.

OIG’s Conclusion:

We understand that Wage and Hour management is in the process of strengthening the internalcontrols over the CMP system. This includes plans for implementation of a new accounting systemas well as improvements to procedural controls. These recommendations remain resolved andopen pending the outcome of our internal control testing in the FY 2001 audit.

Back Wage

We recommended that the Assistant Secretary for Employment Standards establish proceduresto:

• review the reconciliation process and improve the weaknesses noted; and

• bring the reconciliations up-to-date and make the necessary adjustments to the appropriaterecords so that the BCDS regional system, and the BTS National Office system of records arein agreement.

During our FY 2000 audit, we found that the BCDS and BTS systems did not reconcile and didnot provide a sufficient subsidiary record of the cash, accounts receivable or accounts payable(cash balances pending disbursement to employees) recorded in DOLAR$. While the regionaloffices are now effectively reconciling cash activity recorded in BCDS with that recorded by theNational Office in BTS (and DOLAR$) reconciliations have not been performed to adequatelyaddress the long outstanding differences between BCDS and BTS. Therefore, theserecommendations remain unresolved. Resolution is dependent on our receipt and review ofspecific reconciliation procedures and controls that address the long outstanding differencesbetween BCDS and BTS.


OMAP personnel located in the ESA National Office manage the reconciliation conducted betweenthe BCDS regional system and the BTS National Office System. This reconciliation process asnoted by the auditors effectively addresses the current monthly differences between the twosystems.

The reference to older outstanding differences is addressed in the newly redesigned BCDS 2000


implemented October 2, 2000 which eliminates the need for the BTS. As part of theimplementation, Wage and Hour is in the process of completing the verification of accountsconverted from the old BCDS into the newly redesigned BCDS 2000. Once this process iscompleted the DOLAR$ general ledger back wage accounts will be adjusted to record the BCDS2000 liability amounts supported in the new system. We anticipate the conversion process will becompleted as of September 30, 2001 with appropriate adjustments recorded

OIG’s Conclusion:

It is our understanding that cash reconciliation procedures are currently performed at the NationalOffice using the BTS system, and that Regional Offices are required to reconcile BCDS cashreceipts to cash reports received from the Lock Box. We will review these reconciliations as partof the FY 2001 audit and will assess Wage and Hour’s resolution of any differences noted. Thisrecommendation remains unresolved pending the outcome of our review.


6. Longshore and Harbor Workers’ Compensation Act Special Fund

Status of Prior Year Finding and Recommendation

Issuance of IRS Form 1099s to Rehabilitation Providers

In our FY 1999 audit, we noted that the Longshore Program did not issue IRS Form 1099s asrequired by law. Specifically, we made the following recommendation:

• The Chief Financial Officer and the Assistant Secretary for Employment Standards ensurethat the Longshore Program establishes procedures to ensure all payments made torehabilitation providers are recorded in the new rehabilitation bill payment system and IRSForm 1099s are issued for CY 2000 and beyond.

During FY 2000, Longshore management began issuing 1099s to required recipients. However, asresult of a delay in implementing the new rehabilitation bill payment systems in all of the regions,some of the 1099s issued were incomplete. This recommendation remains resolved and open. Closure is dependent on our review of the new rehabilitation bill payment system during our FY2001 audit to ensure all payments to rehabilitation providers will be included in the issuance offuture 1099s.


All payments made to rehabilitation providers are now recorded in the new rehabilitation billpayment system and IRS Form 1099s were issued for CY 2000. This is now a permanent functionof the RBPS.

OIG’s Conclusion:

This recommendation remains resolved and open. Closure is dependent on our review of the newrehabilitation bill payment system during our FY 2001 audit to ensure all payments torehabilitation providers will be included in the issuance of future 1099s.


7. Fines and Penalties


Incorrect Dates Used for Recording Revenues

Our FY 1999 audit procedures included tests of controls over PWBA’s revenue and accountsreceivable cycle. The results of our tests indicated that revenue transactions were not recorded asof the date that a legally enforceable claim was established. The Office of Program Planning,Evaluation and Management (OPPEM) records penalties (revenue) using the date that the planadministrator is sent written notification (Notice of Penalty Assessment) that a penalty has becomefinal. The date on this correspondence is also used to determine the cutoff for accountingpurposes, rather than the date that the grace period expired and a valid claim was established. Forexample, if the grace period expired in September 1999, but the plan administrator is not notifiedof the final penalty until October or November, revenue is not recorded in FY 1999.

In our FY 1999 audit (OIG Report Number 12-00-003-13-001), we made the followingrecommendation:

• We recommended that the Chief Financial Officer ensures that PWBA revenues are recordedand recognized for financial statement purposes in accordance with the effective datesestablished by the Regulations and FASAB requirements. Revenues should be recorded to thecorrect fiscal year using the date the claim becomes enforceable rather than thecorrespondence date listed on the final notification. In cases referred to an ALJ, the revenueshould be recorded to the correct fiscal year using the date of the ALJ decision.

PWBA has adopted a policy that will ensure the timely recognition of revenue in accordance withGenerally Accepted Accounting Principle (GAAP) requirements. In addition to the policy, PWBAhas requested a Regulatory Review to be done by the Office of the Solicitor to determine the intentof the Code of Federal Regulations. The response from the Office of the Solicitor will determinewhether any changes to the Code of Federal Regulations are needed in order to clarify the date ofthe Final Order. According to PWBA, this review process could be done as early as December2001. This recommendation is now resolved and open.


PWBA expects a Solicitor opinion soon.

OIG’s Conclusion:

This recommendation remains resolved and open pending the outcome of the Solicitor’s opinion.


8. Miscellaneous Revenues


Working Capital Fund Allocations

Our FY 1999 audit (OIG Report Number 12-00-006-13-001) reported that the method used toallocate object class No. 2507, Forms and Publications, does not allocate expenses incurred on anappropriate basis. We made the following recommendation:

• We recommended that the Chief Financial Officer ensures that a method is developed forallocating forms and publication costs which provides an equitable allocation of such costsbased on actual usage.

Our FY 2000 audit procedures indicated that the method used to allocate object class No. 2507,Forms and Publications, still does not allocate expenses incurred on an appropriate basis.

Even though there was a change in the allocation process from FY 1999 to FY 2000, the allocationprocess is still inappropriate. In FY 1999, the agencies were charged based on the number of lineitem requests versus the number of items requested. In FY 2000, agencies are charged per lineitem filled and per requisition filled. This method will still result in the same charge regardless ofthe size of the line item request. Since the allocation is not based on usage, the agencies may beover- or undercharged as compared to the actual cost associated with each request. We contendthat the allocation should be based on the quantity of items filled rather than the number ofdifferent line items. This recommendation remains unresolved.


The WCF charges for storing and issuing forms and publications in the DOL warehouse. For fiscalyear 2000, the Office of Printing and Supply Management Services has revised the strategy forallocating charges for Forms & Publications. A two (2) tier approach is being used for costrecovery. The first tier is space usage. Agencies are charged one half of the warehouse budgetless bulk paper storage. Charges are allocated based on percentage of space used by each agencyplus an allocation of departmental space used based on DOL employment. The second tier is a$47.75 charge per line item filled. All pricing strategies will be further researched to determine thefeasibility of charging based on volume instead of lines filled. If we find this method to be moreequitable, the strategy will be modified and implemented for fiscal year 2002.

OIG’s Conclusion:

This recommendation remains unresolved pending the development of an equitable pricing strategybased on actual usage.


9. Property


Capitalized Asset Property Management

In our FY 1999 Management Advisory Comments (OIG Report 12-00-006-13-001), we reportedthat management’s capitalized asset tracking and reporting procedures are inadequate to ensurethat disposals of capitalized assets are reported in a timely and accurate manner, and that assets areadequately safeguarded against loss or theft.

We recommended the Chief Financial Officer ensures that:

• physical inventories of capitalized assets are performed on a periodic basis;

• periodic reconciliations of the capitalized asset subsidiary ledger are performed, usingCATARS Physical Inventory Reports; and

• Accountable Property Officers (APOs) and Capitalized Asset Management Officers (CAMOs)receive adequate training in the disposal of capitalized assets.

In response to our recommendations, OCFO began to conduct regular meetings with CapitalizedAsset Management Officers (CAMOs) to emphasize the need for accurate and timely processing ofdisposals, and reconciliations between CATARS and physical inventories. Additionally, OCFOissued a new capitalized asset management directive (DLMS 6-730) in September 2000, aimed atclarifying the property management responsibilities between CAMOs and APOs. Finally, OCFOplanned to monitor more closely CATARS activity to ensure agencies are following the prescribedpolicies and procedures.

During our FY 2000 testing of capitalized assets, we identified 22 instances (13 percent) in whichcapitalized property items had been disposed of, but were still reflected in the CATARS subsidiaryledger. Based on the positive trend between FY 1999 and FY 2000 in terms of error rates (22percent and 13 percent, respectively), it appears that the efforts taken by OCFO toensure that capitalized asset disposals are reported in a timely and accurate manner, and that assetsare adequately safeguarded against loss or theft have begun to yield positive results.

Our recommendations remain resolved and open. Closure is dependent upon the successfulimplementation of the OCFO corrective action plan as evidenced by FY 2001 CATARS testingresults.


On March 13, the CFO sent a memo to each of the Agency Administrative Offers that were citedfor failure to remove property from failure after disposal of the property. E-copies of the memosare attached FYI.


In June, the OCFO will present a reconciliation workshop for CAMOS. OCFO will also workclosely with the CAMOs to ensure adequate monitoring of the APOs bi-annual (June & December) physical inventory.

OIG Conclusion:

Our recommendations remain resolved and open. Closure is dependent upon the successfulimplementation of the OCFO corrective action plan as evidenced by FY 2001 CATARS testingresults.

Accountable Property Officer Listing

In our FY 1997 Management Advisory Comments (12-99-001-13-001), we recommended that theChief Financial Officer:

• Ensure that the CATARS APO listing accurately reflects responsible management officials.

In response to OIG concerns, Management reissued DLMS 6-730 in September 2000, for thepurpose of clarifying the property management responsibilities among Capitalized AssetManagement Officers (CAMOs) and Accountable Property Officers (APOs). DLMS 6-730,paragraph 732.4, Capitalized Asset Management Officer (CAMO), states in part that:

“Each CAMO will appoint an Accountable Property Office (APO) for each cost center andmaintain a contact list of all valid APOs.”

Due to the late issuance of the above cited directive, the accuracy, reliability and completeness ofAPO listings compiled by agency CAMOs could not be determined in conjunction with our FY2000 capitalized asset testing. We did, however, continue to encounter numerous instances inwhich the APO identified as having custodial responsibility over property items per the CATARSsubsidiary ledger did not correspond with the APO actually having custody.

Our recommendation remains resolved and open. Closure is dependent upon our review of APOlistings, as well as an assessment of the accuracy, reliability and completeness thereof during ourFY 2001 audit.


A copy of the memo that the CFO sent to Agency Administrative Offiers that transmitted anoverview of CATARS and requested a list of the APOs is attached FYI.

OIG Conclusion:

Our recommendation remains resolved and open. Closure is dependent upon the results of our FY2001 audit.


Inadequate Property Management at Job Corps Centers

In our FY 1998 Management Advisory Comments (OIG Report 12-99-009-13-001), we identifieddeficiencies with respect to non-expendable Government personal property at the Delaware ValleyJob Corps Center (JCC), consisting of understated property balances; a failure to perform annualphysical inventories; and an unacceptably high risk of unauthorized use, loss and theft of CenterOffice Automation Project computer equipment.

• We recommended that the Chief Financial Officer and the Assistant Secretary for Employmentand Training:

1. ensure property transactions occurring during the period March 1997 throughFebruary 1998 at all JCCs have been recorded in CPMS;

2. ensure all property transactions occurring at the Delaware Valley JCC during theperiod March 1997 through February 1998 have been recorded in CPMS;

3. implement a comprehensive property management performance improvement plan atthe Delaware Valley JCC including training of center staff and periodic follow-up ofproperty management activities until such time as the Assistant Secretary forEmployment and Training determines that the center is fully compliant with the ETAProperty Management Handbook;

4. review the actions taken by the New York and Philadelphia regional offices in responseto recommendations made to them by the Job Corps property management supportcontractor during the period January 1998 through September 1998;

5. determine whether all JCCs have properly accounted for Center Office AutomationProject equipment;

6. ensure the Delaware Valley JCC fully complies with all aspects of the corrective actionplan imposed by the property management support contractor;

7. ensure that CPMS accurately reflects center property inventories at all centers prior toconversion to the new property management system scheduled for FY 1999;

8. include property management standards into the Job Corps Outcome MeasurementSystem (OMS); and

9. ensure that all Government property located at the Delaware Valley JCC be properlylabeled, as required by the ETA Property Management Handbook.

Since first reporting on this matter, the Contractor Property Management System (CPMS) hasbeen replaced with the Electronic Property Management System (EPMS). EPMS is a web-based“paperless” system providing Job Corps Centers the ability to record personal property activity(e.g., acquisitions, disposals, and transfers), in near real-time.


During our FY 2000 audit, we found that no action has been taken to resolve the issues identifiedother than initial steps begun by the former Property Management Support Contractor (MACI)during FY 1999. Job Corps cites the following reasons for its inaction: 1) due to a protractedprocurement process, there was no Property Management Support Contractor in place for asubstantial portion of FY 2000; 2) once in place, the new contractor (REA) focused onimplementing EPMS and training Job Corps Center staff in its use; and 3) a reorganizationtransferred property management responsibilities from ETA’s Division of Administrative Services(DAS) to the Office of Job Corps.

In January 2001, Job Corps developed an action plan intended to address deficiencies identifiedwith respect to property management at the Delaware Valley Job Corps Center. This plan includesa site visit and comprehensive inventory to be conducted by four Job Corps property managementspecialists; corrective action, if needed, to be taken based upon the results of the inventory; and areport on the status of property management at the center to be issued to OIG by March 23, 2001.

Our recommendations remain unresolved. Resolution is dependent upon OIG receipt of a JobCorps corrective action plan addressing our recommendations at all Job Corps Centers.


1. Ensure property transactions occurring during the period March 1997 through February1998 at all Job Corps centers have been recorded in CPMS.

It is not possible to verify whether property transactions were recorded in CPMS; however, theCPMS data base has been incorporated into EPMS. No further action is required.

2. Ensure all property transactions occurring at the Delaware Valley JCC during the periodMarch 1997 through February 1998 have been recorded in CPMS.

The Job Corps Regional Office and the property management support contractor have worked withthe Delaware Valley JCC to update EPMS with all past and present property transactions,including purchases and internal transfers. All property transactions during the period March 1997through February 1998 have been updated in EPMS.

3. Implement a comprehensive property management performance improvement plan at theDelaware Valley JCC including training of center staff and periodic follow-up of propertymanagement activities until such time as the Assistant Secretary for Employment andTraining determines that the center is fully compliant with the ETA Property ManagementHandbook.

At the direction of the Job Corps Regional Office, the Delaware Valley JCC will continue toperform mandatory semi-annual property training for all staff. All new staff will receivemandatory property management training within their first week on the job. In addition, thecontractor’s corporate staff and the Job Corps Regional Office are providing oversight to insuretraining is provided and property is properly accounted for.


4. Review the actions taken by the New York and Philadelphia Regional Offices in responseto recommendations made to them by the Job corps property management supportcontractor during the period January 1998 through September 1998.

The Regional Property Officer is continuing to work with the contractor to ensure measures are putin place for the accountability of government owned property at the Delaware Valley JCC. TheRegional Property Officer and Regional Property Coordinator will conduct on-site training at thecenter. In addition, the Region will provide a discrepancy correction letter to the contractor whichprovides a detailed outline for all pending corrective actions and required due dates.

5. Determine whether all JCCs have properly accounted for Center Office AutomationProject equipment.

Center office automation equipment was delivered to directly to centers by the supplier. The JobCorps Data Center has records of where each piece of equipment was shipped. Once theequipment was received on-center, the center operator was required to enter the equipment intoEPMS. To the best of our knowledge, this has been done. No further action is required.

6. Ensure the Delaware Valley JCC fully complies with all aspects of the corrective actionplan imposed by the property management support contractor.

A Property Management Review Report was issued in March after a team performed a site visit atthe center between January 22 and 26, 2001. The purpose of the visit was to; a) verify compliancewith DOL Property Regulations; b) Perform a 100% Inventory; c) Respond to the OIG concerns.A copy of this report was sent to the OIG’s office in Philadelphia in March of 2001.

As a result, the Regional Office has requested that the property support contractor perform atechnical assistance visit to the center to provide training to the center property officer on propertymanagement procedures, property disposition , and how to conduct physical inventories and annualcertification procedures and requirements. In addition, the contractor’s property/inventory controladministrator is performing technical assistance visits to ensure the center complies withestablished policies and procedures.

7. Ensure that CPMS accurately reflects center property inventories at all centers prior toconversion to the new property management system scheduled for FY 1999.

EPMS incorporated center property inventories from the CPMS database. No further action isrequired.

8. Include property management standards into the Job Corps Outcome MeasurementSystem (OMS); and

We strongly disagree with this recommendation. Job Corps’ Outcome Measurement System isdesigned to assess contractors’ performance based on achievements of students, including thenumber of students who complete a vocational training program and/or obtain a GED or highschool diploma, job placement rates and earnings, and job retention and earnings 6 and 12 monthsafter job entry. The OMS reflects requirements contained in the Workforce Investment Act which


focus on long-term outcomes of Job Corps graduates.

Contractors’ responsibility for government-property is clearly spelled out in Federal regulations,ETA and Job Corps policies, and contract provisions. If a contractor has serious problems inmanagement and accountability for Government property, we will make sure the problems will betaken into account in assessments of the operator’s past performance during procurements. Nofurther action is required.

9. Ensure that all government property located at the Delaware Valley JCC be properlylabeled, as required by the ETA Property Management Handbook.

The center operator hired temporary staff to tag items and will ensure that all non-expendableproperty is legibly stenciled or tagged. The labeling system will be verified by the RegionalProperty Coordinator during a site visit, and a random sampling will be performed during the visitto ensure items are properly tagged.

OIG Conclusion:

We agree with management that the Contractors’ responsibility for government property isincorporated into both Federal regulations and ETA policies. As a result we will drop the specificrecommendation, number eight above, to include property management standards into the JobCorps Outcome Measurement System (OMS). This recommendation will be closed.

As a result of ETA’s efforts, as evident through the Job Corps Property Management ReviewReport for the Delaware Valley Job Corps Center, we consider the remaining recommendations tobe resolved. Closure is dependent on our verification that the recommendations, as outlined in theProperty Management Review Report, were successfully completed or implemented.


10. Performance Measures


The following prior year audit recommendations were issued in the cited audit reports directly tothe appropriate Assistant Secretary. We request that the CFO work with the respective AssistantSecretaries to address these recommendations.

Unemployment Trust Fund

Five recommendations are resolved and open from OIG Report No. 03-93-034-03-315, and tworecommendations are resolved and open from OIG Report No. 03-95-011-03-315. The openrecommendations and current status are as follows:

• The total amount of claimant overpayments outstanding at the beginning of the fiscal year plusthe amount of overpayments established and recovered during the fiscal year should beincluded as a baseline measurement.

The ETA Office of Workforce Security (OWS) is continuing to use the measures for effectivenessof collections of fraud and nonfraud overpayments and Regional Office reviews of BPC activities.During FY 2001, ETA plans to convene a Federal-State workgroup to devise better measures fortracking Benefit Payment Control (BPC) activities. This recommendation remains resolved andopen, pending review of the corrective action during our FY 2001 audit.

• UIS should include the . . . payment accuracy rate . . . by including denials in the BQC sampleand reporting the overpayment and underpayment rates for the payment accuracy rate.

• UIS should initiate quality control programs to measure the accuracy of denied initial claimdeterminations and report the results and associated underpayments in the financial overview.

ETA plans to implement a denied claim accuracy measure as a part of the Benefit AccuracyMeasurement (BAM), formerly BQC program. Preparations are on track to begin sampling inJuly 2001. Nationwide training is scheduled for Spring 2001. ETA plans to use contractordeveloped guidance which identifies alternative methodologies for computing the dollar impact oferroneous denials. Using this guidance, ETA will compute aggregate underpayments due toerroneous denials to compare with the aggregate estimates of overpayments and underpaymentsfrom BAM. These recommendations remain resolved and open, pending review of the correctiveaction during our FY 2001 audit.

• UIS should include data elements associated with each of the existing and proposedperformance measures.

• UIS should review validation methods for all other data elements contained on the 28Unemployment Insurance Required Reports.

The data validation system OWS has developed will validate half of the roughly 2,400 dataelements states report on 43 UI required reports. It will include elements used in all performance


measures included in the consolidated financial statements except those involving administrativecosts, trust fund balances, and payment accuracy. The plans for implementing this system havebeen approved and implementation is scheduled to begin during the latter part of FY 2001 andextend throughout FY 2002. States unable to implement the new system in the early phases willuse the Workload Validation system to validate elements used for budget formulation andallocation of UI administrative funds. The Department does not believe it needs to validate thefigures on dollars allocated to states for administrative purposes. It plans to rely on the existingaudits of trust fund balances to ensure the validity of those data. The data on the paymentaccuracy rate, obtained from the Benefit Accuracy Measurement program, have been regularlyvalidated through a system of annual reviews by Regional Office staff and periodic re-reviews byNational Office staff, and thus, require no additional validation efforts. These recommendationsremain resolved and open, pending review of the corrective action during future audits.

• UIS should increase the period being validated from one month for quantity and one quarterfor quality to an entire year.

At this time, it is anticipated that SESAs will be instructed initially to validate one month’s orquarter’s worth of data using the data validation system, which accomplishes both quantity andquality validation. This is to ensure that the validations can be accomplished at reasonable cost. However, the new system is highly automated, and once programming is completed, the costs ofaccomplishing an additional quarter’s worth of elements may be very small. If so, states can beencouraged to validate additional quarters and compare the results with completed quarters. Thisrecommendation remains resolved and open, pending review of the corrective action during futureaudits.

• UIS should reconcile benefit payments per the ETA 5159 to SESA records, to the treasury6100 report, or the ETA 2112 report to ensure accuracy of benefit payment reporting in theUIS financial overview.

The UI Data Validation system is designed to review and ensure the accuracy of the benefitpayment data on the 5159 report. This recommendation remains resolved and open, pendingreview of the corrective action during our FY 2001 audit.


The ETA is moving ahead to establish a Benefit Payment Control measures work group during thesummer of 2001, and implement the BAM denials component and the UI Data Validation system. The workgroup will examine alternatives for establishment and collections effectiveness measures. Denials implementation will be delayed until the first week of August 2001 because of the need tocorrect a faulty programming edit that was found during testing. The ETA expects to receiveOMB clearance for UI Data Validation in late August or early September and will beginimplementation immediately thereafter.

With regard to validating the benefit payments amounts on the ETA 5159 report, the UI DVsystem will validate the ETA 5159 payment amounts by reconstructing the total cell amounts andcomparing those with reported amounts by checking a random sample of the payments againstagency records, and by examining individual payments at the ends of arrays for values that are


outside expected limits. Because of the way the 5159 report records payments, The ETA does notbelieve that these will usually be reconcilable exactly with accounting records such as the ETA2112 or Treasury 6100. However, the ETA 5159 is quite serviceable for the uses to which it isnormally put.

OIG’s Conclusion:

We acknowledge the efforts made by ETA and OWS in addressing our concerns as delineated inthe above recommendations, particularly with regard to the U.I. Data Validation system. However,our recommendations remain resolved and open pending completion of our ongoing audit of theU.I. Data Validation system, as well as our FY 2001 audit of program costs and results.

Occupational Safety and Health Administration (OSHA)

In OIG Report No.05-95-003-10-001, one recommendation remains resolved and open.

• We recommended that OSHA continue development of meaningful and relevant measures ofOSHA’s performance that can be linked to program costs. We also recommended that OSHAensure its proposed systems that gather injury and illness data directly from employers containspecific controls that address completeness and accuracy.

During FY 2000, OSHA participated in a pilot project conducted jointly by the Office of the ChiefFinancial Officer and a contractor to apply cost accounting principles to the activities of theVoluntary Protection Program. This pilot was an initial step toward recognizing andunderstanding the problems and opportunities involved in implementing a cost accounting system. As an outcome of this and other efforts, the Department is developing the capacity to consolidatedata from a variety of financial and other system sources and to link financial data to performancemeasures. Until this and other developments are put in place, OSHA is limited by the currentagency and departmental financial and personnel systems and their incompatibility. OSHA’sperformance goals span the agency’s program and budget activities. OSHA remains committed todeveloping a cost accounting approach and system that will more accurately track program costsagainst program activities.

The OSHA Data Initiative (ODI) database contains various edit checks, and requires thatemployers be contacted to correct any deficient data. In FY 1998, OSHA began conducting annualonsite audits of the injury and illness records of a random selection of employers participating inthe ODI to determine the accuracy and reliability of the OSHA 2000 logs, the source of data forthe ODI and the BLS Annual Survey. OSHA’s Integrated Management Information System(IMIS) uses several methods of data validation, including: comparison with previous IMIS dataand other reliable sources; daily edit checks, required field office review of significant andegregious cases, corporate settlements, and other selected cases; instructions in citation letters onhow to review OSHA inspection data on the Internet, and instructions for employers and workerson how to correct information they believe to be incorrect.

This recommendation remains resolved and open. OIG will continue to monitor OSHA’s progressin developing meaningful and relevant measures and their development of a cost accounting


approach that will link financial data to performance measures. Also, we will continue to monitorOSHA’s progress in validating its performance measures.

For OIG Report No. 05-93-006-10-001, one recommendation remains resolved and open.

• We recommended that OSHA implement a program to monitor the quality of employer injuryand illness records and undertake a broader review than was previously conducted.

OSHA’s revised record keeping regulation was published in the Federal Register on January19, 2001. The revised rule, which replaces requirements implemented in 1971, will produce betterinformation about occupational injuries and illnesses, while simplifying the record keeping systemfor employers and protecting the privacy of employees. The rule combines previous regulatoryrequirements and interpretations into one document for greater clarity. Employers have been givenmore flexibility to use telecommunications technology to meet their record keeping requirements,while employee involvement in the record keeping process has been enhanced. If approved by thenew Administration, the final rule will become effective on January 2002 to give employers time tolearn the new requirements and to revise computer systems that they may use for record keeping. OSHA’s quality control program will continue to include an information and outreach program onthe new record keeping guidelines.

This recommendation remains resolved and open. During our FY 2001 audit, we will review therevised guidance relating to record keeping and determine the progress of OSHA’s monitoring ofthe quality of employer injury and illness records.


OSHA has implemented a performance measurement system in accordance with the agency’sStrategic Plan for Fiscal Years 1999-2004. By FY 2002, the agency expects to meet or exceedmost of the injury and illness reduction goals in its current Strategic Plan. New performancetargets will then be identified for inclusion in the FY 2002 revision to the plan. Based on theresults achieved as well as feedback from customers and stakeholders, OSHA will conduct areview of its overall strategic goals to determine if any changes are necessary. After setting newgoals and determining indicators, the agency will establish baselines for the new indicators.

As an outcome of the cost accounting pilot project conducted jointly by Pricewaterhouse Coopersand the Department’s CFO, the Department has begun to develop the capacity to consolidate datafrom a variety of financial and other system sources and to link financial data to performancemeasures. OSHA remains committed to developing a cost accounting approach as part of itsperformance measurement system, but is limited by the current agency and Departmental financialand personnel systems and their incompatibility.

OSHA’s revised recordkeeping regulation was published in the Federal Register on January 19,2001. The regulation is currently under review by the new Administration.


OIG’s Conclusion:

Our recommendations remain resolved and open pending the outcome of our FY 2001 audit.

Employment Standards Administration, Wage and Hour Division

In OIG Report No. 12-96-011-04-420, one recommendation remains resolved and open.

• CMP collections be matched against their respective assessments so that a more accuratecollection rate can be established.

During FY 2000, Wage and Hour revamped its CMP tracking system which tracks CMPassessments and collections on a case-by-case basis. This system should match collections withthe corresponding assessments for a more accurate collection rate. However, the system is notfully operational. This recommendation remains resolved and open pending review of the fullimplementation of the system during our FY 2001 audit..


The CMP tracking system has the ability to accurately and completely track collection ratios forevery case assessed since June 1997. A sample report showing assessments, adjustments, andcollections is attached. Accordingly we believe this finding should be closed.

OIG’s Conclusion:

While we acknowledge Wage and Hour’s efforts to resolve our recommendation pertaining to CMPcollections, this recommendation remains resolved and open pending review of the fullimplementation of the CMP tracking system during our FY 2001 audit.


11. Unemployment Trust Fund


Unemployment Compensation Advisory Council

During our FY 1997 audit, we noted that the Unemployment Compensation Advisory Council(UCAC) required by the Social Security Act has not been reestablished. Section 908 of the SocialSecurity Act makes no provision for delaying the establishment of a new Advisory Council, and theissues for which the Council is responsible are significant to the UI program. We made thefollowing recommendation (Report No. 12-98-002-13-001):

• We recommended that the Assistant Secretary for Employment and Training ensures that theUnemployment Compensation Advisory Council is reestablished as required by Section 908 ofthe Social Security Act.

During the FY 2000 audit, we found that a new UCAC is still not established. Management statedthat the Administration and partners/stakeholders of the UI program have been examining UI,including the recommendations from the previous Unemployment Compensation Advisory Council. Furthermore, management stated that it would be premature to establish a new UCAC with thecurrent activities under way and that there were no resources given budget constraints to support anew UCAC. Because a new Advisory Council has not been established nor has a time frame beenprovided as to when another council would be discussed or established, this finding remainsunresolved.


The ETA plans to discuss modifying this provision of the law with Administration policy-makersin the context of UI/ES Reform.

OIG’s Conclusion:

This recommendation remains unresolved pending a definitive plan of corrective action.

Documents

1. Federal Employees Compensation Act (FECA) · 1. Federal Employees Compensation Act (FECA) ... Additionally, the preparing of the estimated liability in future years, ... Insurance